<quote name="Nicholas Leippe" date="Fri, 5 Dec 2008 at 11:20 -0700"> > On Friday 05 December 2008 10:58:33 am Von Fugal wrote: > > > However, you're forgetting, that with a static currency supply, the per > > > capita purchasing power has now decreased inversely proportional to the > > > increase in capita. > > > > The money supply per capita has decreased, but not the purchasing power. > > Because rememeber, there's increased supply, so the purchasing power of > > a given amount of money goes UP, that means I actually need less money, > > hence it's just fine that new producers are absorbing some of the money > > supply. Just look, they are aqcuiring that money fairly by supplying > > something in return! > > > > > Now what have we got? We've just lowered the demand--the demand curve > > > shifts to the left, lowering both the price, > > > > Yes, the price lowers. > > > > > and the number of goods exchanged > > > > No, the demand is still the same. > > No. Number of goods exchanged is just like price--determined by the supply > and > demand curves. The number of goods exchanged may increase, but if the > increase > in demand is less than the increase in supply, that means that the number of > goods exchanged _per capita_ has decreased--thus per capita they are less > wealthy. I'm probably confusing per capita (people) with per capita (production). If it's people, then people have very well defined needs and wants, for which the demand curve doesn't change over time. If the cost goes down (more supply) then the demand (not the curve) actually goes up, not down. So I see an increase in exchange, not a decrease.
If it's product, then the ideal is always for all product to be exchanged. In fact it's impossible to have less product than what's being exchanged, and if you have more product than what's being exchanged then you must lower the price, the lower price increases demand, and you exchange all you produce. So the ration of exchange to per capita production is _always_ 1:1, if not, then you're losing money and will probably go out of business, replaced by someone who does exchange all they produce, maintiaining that 1:1. The cost doesn't determine the demand curve. The demand curve determines the cost. Price doesn't even determine the cost. The supply of money vs the demand of money (what things cost) determines price. Starting with a given supply demand curve, you get a cost. Going from that cost you then get a price. It's a DAG, yo. Supply and demand curves are already curves. The cost/demand relationship is already encoded in the curve. So sure, cost effects demand, but it does _not_ effect the demand _curve_. I apologize, I have been sloppy myself with the distinction of supply demand curves and actual supply and demand. Von Fugal -- Government is a disease that masquerades as its own cure -- Robert Lefevre
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